Morgan Stanley strategist predicts global robot shortage

Dec. 4, 2016

“It may not be long before economists are worrying about a global shortage of robots,” writes Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management, in The Washington Post. He contends that fewer women are having children, so growth of the labor force (consisting of people between 15 and 64) “…is poised to decline from Chile to China.” Further, people are living longer, and retirees will drive most population increases.

“These trends are toxic for economic growth, and boosting the number of robots may be the easiest answer for many countries,” he writes. “Something will have to fill the void left by, say, retiring farmers, and particularly at a time of rising hostility to immigrants, it is likely to be farmbots.”

He explains, “In many industrial countries, from Germany to Japan to South Korea, growth in the working-age population has already peaked, acting as a drag on the economy.” And he adds, “China’s labor force is expected to lose 1 million workers each year for the foreseeable future, and it is also aging rapidly.”

He acknowledges concerns about robots displacing workers, mentioning the often-cited 2013 Oxford University study by Carl Benedikt Frey and Michael A. Osborne, predicting that 47% of United States jobs are susceptible to computerization.

Sharma suggests such concerns are overblown. He writes that “…often, humans find a way of working with their automated creations. After the introduction of supermarket scanners, the number of cashiers grew. Though legal-discovery software appeared to threaten the jobs of paralegals, their ranks increased, too. Now, many fear that self-driving trucks will displace millions of American truckers, but they may create more and better jobs for those who service those increasingly complex vehicles.”

With respect to the truckers, one response would be, if self-driving trucks create more and higher paying jobs than those they displace, what is the incentive for the trucking industry to go down this route?

However, he does have empirical evidence on his side. We are not yet seeing the negative impact of automation on jobs that has often been predicted. “Since 2008, economic growth has been weak compared with that in other post-crisis recoveries, but job growth in the major industrial countries has been relatively strong,” he writes. By way of example, he notes that the Japanese economy is growing at only 0.8%, yet Japan is at full employment.

“According to my research,” he adds, “the job picture has been particularly strong in Germany, Japan, and South Korea—the industrial countries that employ the most robots.”

He acknowledges that the worldwide labor force includes 320 million humans and just 1.6 million robots—many of which are unintelligent single-task machines. “Nearly half of them work in the auto industry, which is still the largest employer (of humans) in the United States,” he says. So it seems the effect of an increasing number of increasingly intelligent machines remains to be seen.

Nevertheless, “Most of the world is graying fast,” Sharma concludes, “and the economic answer to aging will be all hands on deck, no matter what they’re made of.”

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